toyota leads in customer loyalty

Toyota Motor (TM) may be experiencing its share of quality slips and
bad press about not being as "green" as its reputation suggests, but

Toyota customers have been re-upping with the Japanese automaker at a
rate that makes rivals envious.
It was the second straight year that Toyota led all automakers in a
study conducted by J.D. Power & Associates. Sixty-five percent of
Toyota's buyers last year traded a Toyota for a new one. Toyota's
luxury nameplate, Lexus, finished second, with 63%, followed by Honda
Motor (HMC), at 62.8%.
Behind the Scores
"Toyota's high customer retention rate is particularly notable,
considering that new-vehicle sales have declined in the past year,"
says Neal Oddes, director of product research and analysis at J.D.
Power. (Like BusinessWeek, J.D. Power is a division of The McGraw-Hill
Companies (MHP).) "Toyota maintains its high retention rates by
providing high-quality vehicles and service to its existing customers,
which in turn generates favorable word-of-mouth recommendations that
attract new customers." says Oddes.
Toyota's performance in customer retention is impressive considering
the industry average of just 49%. The highest scoring U.S. nameplate
was Chevrolet, at 56%, owing mostly to the high loyalty rate among
buyers of Chevy pickups and large sport-utility vehicles such as the
Suburban. Ford Motor (F) scored 53%, much of that also owed to its
pickup business.
The lowest-ranking automotive brands score poorly for different
reasons. Mini, for example, scored second from the bottom mainly
because Minis (BusinessWeek.com, 3/29/07) have been sold only since
2001, and not many are being traded in. Isuzu Motors (ISUZF) is the
lowest-scoring brand, but that Japanese brand is barely in business at
all. Pontiac was the lowest-scoring nameplate with no mitigating
explanation for its poor rating of 28%. General Motors (GM) has muddled
the brand for more than a decade with a mixed bag of disconnected
products, poor resale value, and mediocre quality.
Jaguar and Land Rover were the poorest-scoring luxury brands in the
Power study. Land Rover has scored poorly in Power's quality rankings
for years. Jaguar has had poor resale value, as well as notable design
misfires including the X-Type and S-Type. Ford, which owns both brands,
is on the verge of selling the luxury nameplates, possibly to one of
India's two automakers, Tata Motors (TTM) or Mahindra & Mahindra (MAHM).
BMW (BMWG) topped European brands for customer loyalty, at 58%.
Mercedes-Benz (DAI) followed at 57%, Porsche (PSHG_p.F) at 42%, Audi at
41%, Saab at 34%, and Volvo and Volkswagen (VLKAY) both at 33%. The
weakness of the U.S. dollar against the euro will make retaining
customers even harder for European brands in the next few years as they
are pressured to raise prices.
What Keeps Buyers Coming Back?
Marketing analysts say a solid record of quality and reliability
combined with clarity and consistency of advertising keeps customers
coming back. "There are still many companies that do not understand
that consistency of image over time is as important as making sure the
quality is up to snuff and the dealers are doing their jobs properly,"
says independent marketing consultant Dennis Keene, who advises
companies on long-term brand strategy. "BMW not only performs on
quality and design year in and year out, but it's communication as 'the
ultimate driving machine' hasn't wavered since the early 1970s,"
Brands that are surging in customer retention after new-product and
customer service blitzes include Suzuki Motor (SZKMF) and Mazda Motor
(MZDAF), which have gained 19% and 9%, respectively, in the last 5
years. "The improvements that Suzuki and Mazda have made in vehicle
appeal and quality have paid off in steady increases in their customer
retention rates during the past five years, indicating that they have
also been successful in changing customer perceptions of their
vehicles, which can be a daunting task," says Oddes.
Auto executives disagree sometimes about the most important drivers of
customer loyalty—quality, design, or customer handling. But one thing
they agree on is that it's far cheaper to keep a customer under the
brand umbrella than it is to convince someone to change brands.
http://www.businessweek.com/autos/content/dec2007/bw2007126_407250.htm?c
ampaign_id=yhoo

When I buy a new car, I rarely trade a car/truck back to the dealer. My
Father never traded cars back in. Neither of my Sisters have a traded a car
back to the dealer. I wonder how they account for people like us in their
survey? It is my experience I get a better deal by selling the old car
myself. I also noticed that Scion had one of the worst retention rates
(30.9%). Don't you suppose this might be becasue Scion owners bought
Toyotas? I wonder how they account for Ford owners that buy Mercuries or
Lincolns?
Ed

Scion is considered an "entry level" vehicle, to get you 'into the fold'.
It's like the old GM strategy of the 30's-50's that you start with a
Chevy, move to a Buick, and end up with a Cadillac (preferrably not just
as a hearse...)
Scion is to get you into the Toyota family, and then move up to a Toyota,
and then preferrably to a Lexus (Japanese hearses are generally based on
the Toyota Crown Royal, which I believe is not sold here at all. You still
end up with a Cadillac...)

As well as I can recall, I've never traded in a car to a dealer - I've owned
20 0r 25, and always sell them off privately. I don't mind too much getting
screwed, but I just don't want to be screwed by a car dealer, who will never
give you more than wholesale, minus restoration.

Toyota has lost my loyalty for sure. We have bought 4 Toyotas over the
years, but will not be buying any more.
They have lost their zeal for quality, and become arrogant, and not
customer oriented.
You no longer get what you pay (extra) for.
pgmer6809

I have limited experience with Toyota -- a Corolla SR5 in the mid 70s (from
new pulled badly to the left and Toyota could or would not fix it), a Previa
(rock solid) years ago, and more recently a Lexus RX 300. I have had a far
better experience with Honda over the years to include their motorcycles.
The Lexus was expensive to buy and own mistake and we traded on a Pilot.
Lexus service is not better than my local Honda dealer -- in fact not even
as good locally, which makes the difference. Every time I went into the
Lexus dealer I was gouged -- $150.00 for an oil change and tire rotation
with an inspection for example. Honda does it for about half the price.

Lexus is Toyota's cash cow. The RX300 was based on the Camry chassis,
like the RX400, ES300 and Highlander . I personally don't think the
underlying technology is worth the extra cost unless people want a
dolled-up Camry XLE then I send them to the ES. However, Lexus is a
marketing success -- they just doll it up and sell at high prices is
really amazing. But of course the Japanese consumers don't buy it,
they just go for BMWs.

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